Larson’s Cycle – Cambridge, MN – March 31, 2003

BUSINESS PROFILE
17,400-sq.-ft. dealership founded in 1955 by the Larson brothers’ parents, 34 miles north of the Twin Cities. Carries Honda, Yamaha, Suzuki, KTM, and Arctic Cat full lines, except PWC. “In the last three or four years, of course, ATVs have dominated overall volume,” says Mike Larson. “It’s close to 50% of the units we sell.” 27 employees.

GREATEST CONCERN
“What is it going to take for growth to continue? That’s one concern,” says Larson. “I think we’re also facing market saturation in several segments very soon, especially ATV. Not that we’ll turn the switch off, but people aren’t going to walk in and throw their checkbook at you anymore.

“Three years ago everybody was buying their first ATV — or they hadn’t owned one since the three-wheelers 15 years ago. Now our buyers are adding a second, third, fourth unit to the family.”

Larson believes potential land closure is an underlying factor in limiting high market growth. A third concern: the economy, “although I hate using that word or listening to the news media, which perpetuates the negativity.”

WHAT’S HOT?
Larson’s best-selling large utility ATVs are the Yamaha Grizzly and the Honda Rincon, with the sporty Suzuki LTD400 just behind, “although we sell a pretty wide range,” notes Larson.

“In off-road motorcycles, KTM is still on a flyer — my best-selling 125cc last year, the first time a European 125cc out-sold a Japanese dirtbike in my store. We sell a lot of Honda Gold Wings and sportbikes, particularly the Yamaha YZF-R6 and the Honda CBR600RR.”

As for sleds, the Arctic Cat Firecat and the Yamaha RX-1 are standouts. “The F series will take the industry to the next level with design technology, and the Yamaha series will do the same with engine technology.”

Larson says he has “a pretty bad taste in my mouth regarding the snowmobile industry. We haven’t had what I call ‘marketable’ snow in five years — that is, when it snows early enough to gain the enthusiasm and the confidence of buyers so they buy early. It doesn’t matter if it snows in February. By then everybody is selling at cost or substantially below cost to move inventory.”

CUSTOMER BUYING TRENDS
Although Larson’s has “a very large audience, demographically,” Larson has seen the average age of the buyer increasing. “I don’t know how to correct that. I do have several customers where the grandfather bought from me 20 years ago, then brought in his son, and that man is now bringing in his son, the grandchild.”

ANTI-POWERSPORTS ISSUES
“There was some very negative press on ATVs last year in the Minneapolis Star-Tribune, but I haven’t seen any in the last few months,” says Larson. “Isanti County, which we live in, is trying to pass an ordinance against private tracks — buying 20 acres and having a little track in your yard — and that has everybody up in arms. Not a track for hire, just to ride on your own property.”
As for last year’s gubernatorial election, “Yes, Jesse Ventura was a friend of the powersports industry, but I’m pro-Tim Pawlenty. I’m confident the new governor, who’s an excellent conservative, is going to be pro-powersports, also. Maybe just not as loudly.”

PARTS AND SERVICE
Larson’s has six service technicians, a service manager, a service writer, five parts salespeople, and one parts manager. “We’ve expanded, adding more techs,” says Larson. “I hired a new service writer this year who’s scheduling differently and managing the service department flow better. Not a big change, but a step in the right direction.”

WORDS OF ADVICE
“My best advice for the next couple of years is not to overbuy,” says 46-year-old Larson, who has worked in the industry since age 13. “The manufacturers are having a hard time shutting off the production faucet. Because orders and allocations are placed so far in advance, it’s very easy to overbuy. Watch your inventory.”
Is that even more important for the multi-line dealer? “Absolutely,” says Larson. “You have all these reps hammering on you. You have to juggle that with what you think the industry is doing and what the economy might do.”

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